T-Mobile and MetroPCS Join Forces in $1.5 Billion Merger

According to the Wall Street Journal, a deal has been reached between T-Mobile USA and MetroPCS that will see the fourth- and fifth-largest carriers in the United States merge together. T-Mobile’s parent company Deutsche Telekom, based in Germany, will reportedly hold 74 percent of the combined shares, while MetroPCS will hold a remaining 26 percent stake in the company and receive $1.5 billion in cash to settle its troubles.

While new T-Mobile CEO John Legere will remain at the helm of the company, Engadget reports that this deal is positioned as a reverse merger. Essentially, this means that MetroPCS will be taking over T-Mobile in the United States. This merger is intended to be a pathway for Deutsche Telekom to exit the American market, as the German company is said to slowly reduce its involvement with T-Mobile by selling off its shares over time.

“We are extremely pleased to announce this transaction with MetroPCS, which enhances Deutsche Telekom’s position in the expanding U.S. wireless market,” said René Obermann, Chief Executive Officer of Deutsche Telekom. “The T-Mobile and MetroPCS brands are a great strategic fit – both operationally and culturally. The new company will be the value leader in wireless with the scale, spectrum and financial and other resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network. We are committed to creating a sustainable and financially viable national challenger in the U.S., and we believe this combination helps us deliver on that commitment.”

Neither T-Mobile USA or MetroPCS officially carry the iPhone, although T-Mobile does host campaigns that attempt customers to bring their unlocked iPhones to the network. This merger should finally provide T-Mobile with a true 4G network, although it requires expansion. When its network is truly iPhone-optimized, the joint T-Mobile and MetroPCS firm could carry the iPhone if an agreement can be reached with Apple. More details ahead. 

John Legere, President and Chief Executive Officer of T-Mobile, said: “The combination with MetroPCS is another logical and significant step that will accelerate our Challenger Strategy and enable us to deliver amazing, affordable and trusted 4G services, while providing opportunities to expand geographic territories and serve more customers. Our enhanced spectrum position will be the foundation for a faster and more reliable network, and will allow us to deploy a deeper and more robust LTE rollout, particularly in major metropolitan areas. We will be a stronger, value-focused competitor, providing customers with offerings such as our Unlimited Nationwide 4G Data and ‘bring your own device’ plans. These features, along with our ability to react with greater speed and effectiveness to customer and market opportunities, will deliver value to our customers, business partners, employees and shareholders.”

[Engadget]

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